Ireland’s 12.5% corporate tax rate was not “up for grabs”, if the Government decided to seek a precautionary credit line after exiting the bailout next month, a senior minister has said.
Pat Rabbitte said the issue was not alluded to by European partners in any talks on whether to leave the bailout without a pre-negotiated agreement to access funds if needed.
“The corporate tax rate is safe and did not feature in the discussions,” he told RTÉ’s The Week in Politics.
“I do not believe it is the case that the 12.5% corporations profit tax was up for grabs,” he added.
The corporate tax rate has long been the envy of other European countries, including France and Germany, where it has recently been criticised by the Social Democratic Party which is in talks with chancellor Angela Merkel’s Christian Democrats on the formation of the next Government.
Former European Minister Lucinda Creighton suggested the cost of a credit safety net would have been the corporate tax rate which she described as “this treasured weapon in our economic arsenal”.
But when this was put to Mr Rabbitte yesterday, he said: “I don’t think that’s true and it certainly hasn’t been raised”.
He said: “The point that is being missed here is that we didn’t apply for a precautionary credit line. There were a series of bilateral discussions about the options open to Ireland now.” As a result of those discussions, he said, “we came to the conclusion that we ought not apply for a precautionary line of credit.”
Finance Minister Michael Noonan said he could not get a “clear read” on how the process would work, had Ireland applied, and a prolonged negotiating process could have impacted negatively on Ireland’s reputation.
In an interview with The Sunday Business Post, he said: “I had this fear that I might end up in Brussels at three o’clock in the morning some time in December, with a success story being turned into some kind of Irish crisis.”
He also said this was the time to make a clean break from the bailout, because “we are in a kind of benign space” economically. And, he said, “the precautionary line of credit is not all it’s cracked up to be”.
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